INVESTORS TITLE CO (ITIC)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue rose 31.6% year over year to $70.6M, with diluted EPS of $4.41; net premiums written and escrow/title fees drove the top-line, partially offset by lower net investment gains .
• Operating expenses increased 26.0% YoY to $59.8M, largely from higher agent commissions tied to volume; overhead costs were described as flat versus prior year, aiding profitability .
• Sequentially, revenue improved to $70.6M from $68.8M in Q3 and $65.4M in Q2, reflecting activity levels supported by lower average mortgage rates and ongoing expansion initiatives .
• Potential stock reaction catalysts: accelerating revenue to the highest in over two years, management’s continued expense discipline, and a November special dividend ($14.00/share) plus regular quarterly dividend ($0.46/share) signaling capital return confidence .

What Went Well and What Went Wrong

What Went Well

• Strong YoY growth: revenue up 31.6% to $70.6M; income before taxes up to $10.8M from $6.2M; diluted EPS up to $4.41 from $3.09, demonstrating operating leverage on higher volumes .
• Mix and distribution: net premiums written increased to $57.8M, underpinned by agency-driven volume (73.2% of premiums) and expansion initiatives; management highlighted “ongoing expansion initiatives” and lower mortgage rates as drivers .
• Expense control: while commissions rose with volume, personnel expenses decreased versus prior-year quarter; Chairman noted “ongoing cost control measures which kept overhead costs flat” .

Management quote: “We are pleased to report growth in both revenue and net income… Profitability was aided by ongoing cost control measures which kept overhead costs flat when compared to the prior year.” — Chairman J. Allen Fine .

What Went Wrong

• Investment gains softness: net investment gains were de minimis ($0.04M) in Q4 versus $2.73M prior year, as equity fair value changes and reduced sales activity weighed on reported investment results .
• Personnel expenses decreased YoY but total operating expenses still rose 26% due to higher commissions tied to premium volume; margin expansion was partially constrained by volume-linked costs .
• Macro headwinds: management cited “record low levels of affordability” and overall housing market challenges; home sales hovered near a 30-year low during 2024, limiting upside despite improving rates .

Financial Results

Quarterly Financial Comparison

YoY Q4 Comparison

Revenue Composition (KPIs)

Operating Expense Detail

Net Premiums Written by Channel

Guidance Changes

Earnings Call Themes & Trends

Note: No Q4 2024 earnings call transcript was available. Themes derived from company press releases and 8-Ks.

Management Commentary

• “The Company achieved a solid gain in revenue, taking it to the highest level in over two years. Profitability was aided by ongoing cost control measures which kept overhead costs flat when compared to the prior year.” — Chairman J. Allen Fine .
• “Although conditions in the real estate market remain challenging… Any stabilization or decrease in mortgage interest rates along with ongoing improvement in the supply of homes… should be supportive of increased activity.” — Chairman J. Allen Fine .
• “We were pleased to see an increase in revenues and net income for the third quarter, driven mostly by higher volume, particularly in agent-focused markets… overhead costs were down from the prior year period due to cost-saving measures.” — Chairman J. Allen Fine (Q3 release) .
• “Premiums written increased due to higher activity levels and higher average real estate sales prices… Expenses… favorably impacted by relatively low claims experience versus historical norms.” — Chairman J. Allen Fine (Q2 release) .

Q&A Highlights

• No earnings call transcript was located for Q4 2024; therefore, no Q&A themes or guidance clarifications are available from a call transcript [ListDocuments earnings-call-transcript: 0 results].

Estimates Context

• Wall Street consensus estimates via S&P Global were unavailable at the time of analysis due to an API limit error; as a result, comparisons to consensus EPS and revenue are not included in this recap [GetEstimates error].
• Without consensus benchmarks, investors should focus on sequential and YoY trajectories and management’s qualitative drivers (expansion, rates, affordability) to infer estimate revision risk .

Key Takeaways for Investors

• Revenue accelerated to $70.6M in Q4, the highest in over two years, supported by net premiums written and escrow/title fees; EPS of $4.41 reflects operating leverage despite lower investment gains .
• Agency channel strength continues (73.2% of Q4 net premiums), aligning with expansion efforts in Texas and Florida and broader distribution gains; direct channel mix moderated sequentially .
• Expense discipline persists: personnel costs declined YoY and overhead costs were flat per management, though commissions rose with stronger volumes, keeping total OpEx growth below revenue growth .
• Macro remains a swing factor: lower average mortgage rates support activity, but housing affordability at record lows constrains upside and keeps volumes below post-COVID peaks per management commentary .
• Investment gains are a variable headwind/tailwind; Q4 saw materially lower gains vs prior year, driven by equity fair value changes and lower sales activity, partially masking core operational improvement .
• Capital return signal: a $14.00 special dividend plus $0.46 regular quarterly dividend in November underscores balance sheet strength and confidence in cash generation .
• Near-term trading setup: watch for mortgage rate stabilization and inventory improvements as potential catalysts for sustained premium volume growth; monitor agency commission intensity and investment gains variability for EPS trajectory .